$1.3 Billion Rise of Investment in Indian Fintech Landscape

Leading management consulting firm, Zinnov, today released its latest study conducted on the Fintech Start–up Landscape in India, suggesting an exponential rise in the number of Fintech start-ups over the last three years with a total investment in the sector crossing over USD 1.3 billion. The report revealed that the Indian Fintech sector is riding a high tide with 90% of the funding raised over the last three years, thus attracting numerous Indian and foreign investors. In terms of cities, Bangalore, Mumbai and the NCR region lead the way as attractive destinations for the start-ups.

The report which analyzed over 180+ Fintech start–ups across India, puts forward insightful revelations on the Fintech sub segments. These include p2p platforms, marketplaces and aggregators, payment start-ups, crowdfunding platforms and financial services. A percentage wise split based on various sub segments reveals that the payments segment has the highest number of start-ups at 33%, followed by aggregators at 29% and by financial services at 15%. P2P platforms, crowdfunding and Bitcoin start-ups account for the rest.

The report stated that the mobilewallet start–ups have received the most funding over the last two years with PayTM alone raising over USD 890 million. The other key players in the sector include Mobiwik, Momoe, Zipcash amongst others. This tremendous growth is attributed to the rise of Indian E-commerce and the active M&A’s in the mobile wallet space in the recent past, with Snapdeal acquiring Freecharge, Ola acquiring Qarth, Flipkart acquiring PhonePe, Amazon acquiring EMVANTAGE etc.

Additionally, the report mentioned that with the increasing digitization of commerce channels, a number of companies especially in the retail sector are implementing mPOS, leading to an increased adoption of these solutions. India currently has over one million mPOSterminals and owing to its affordability and convenience, it is further estimated to grow at CAGR of over 55% in the next five years.

With regards to the start-ups in the aggregator segment, the report highlighted that a whopping 50% of aggregator/marketplace start–ups have come up over the lasttwo years. ‘Ease of use’ and the convenience of having a one-stop shop for a specific service has been the key determinant of adoption for aggregators. Thus the segment has seen a significant investment of USD 200+ million with 80% of this funding raised over the last three years.

The report further established that an interesting sector to look out for in the Indian Fintech start-up landscape is the P2P sector, with more than 80% of the P2P lending start–ups founded over the lastthree years. With more than 50 million SMEs and growing, the quick access to capital, avoidance of tight regulations and credit checks, coupled with an unfriendly banking system has led to the rise of P2P lending start-ups, with players such as Instapaisa, Lendbox, Indialends and Faircent amongst others.

The number of crowdfunding platforms too has grown over the last few years and is set to increase drastically. While most of these platforms intend to serve a social cause, some also facilitate fundraising for other start-up initiatives. Some of the prominent start-ups in the sector include Wishberry, Milaap, RangDe and BitGiving amongst others.

The study goes on to mention that along with the rising number of Fintech start-ups, a number of start-up accelerators too have emerged across India over the last three years aiming to create a Fintech focused ecosystem and these particularly include Start Tank, Startup Studio etc. It also highlighted the role of RBI’s recently launched Unified Payments Interface (UPI) calling it a game changer for the banking and E-commerce sectors and seeing it as a significant step towards achieving the goal of ‘Digital India’.

Speaking about the report, Anand Subramaniam, Engagement Managerand Project Lead, Zinnov,says, “The financial services sector is undergoing a transformation with digitally enabled start-ups employing newer business and delivery models to compete with traditional enterprises. India is proving to be a hot-bed for Fintech start-ups. The conceptualization of the India stack and the goal of Digital India are further expected to augment the growth in the Fintech segment“.

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